Below are excerpts from the quarterly report of TwinPeak Capital, a private family office we manage.
December 31, 2016
TwinPeak Capital NAV (the “TWIN”) increased 2.97% versus a 1.27% loss for the iShares Core MSCI Pacific ETF (the “MSCI Pacific”) for the quarter ending December 31, 2016. The following table compares the TWIN’s unaudited performance (after fees) with that of the MSCI Pacific for various periods ending December 31, 2016.
For the quarter ended December 31, 2016, the Company outperformed the iShares Core MSCI Pacific ETF (the “MSCI Pacific”) by 4.24 percentage points. From inception, the Company outperformed the MSCI Pacific by 15.82 percentage points on a cumulative basis.
At December 31, 2016, the value of a SG$10,000.00 hypothetical investment in the TwinPeak Capital at its inception is worth SG$11,511 compared to SG$9,929 for the MSCI Pacific.
The year 2016 turned out to be another challenging year with many unexpected events such as Brexit and Trump’s victory. While these events resulted in substantial declines in the stock market, the declines were short-lived. More recently, OPEC’s decision to reduce production has sent oil prices up 40% compared to a year ago. Trump continues to dominate headlines with his anti-China, anti-trade rhetoric.
It is interesting to note how the tables have flipped. Just five years earlier, the Chinese economy was booming while the United States was still reeling from the repercussions of the Global Financial Crisis. The US dollar was depreciating and markets though the year was being artificially deflated. Fast forward to today, the United States economy is going strong with consumer confidence high and inventory levels low. The FED did its second rate hike in December and the US dollar has rebounded strong since then. Contrastingly, pressure on the offshore yuan is intensifying amidst persistently high funding costs. Thankfully, with out portfolio overweight on Hong Kong stocks, we were well-positioned to ride the rebound and book significant currency gains.
At this point of writing, the S&P500 is at its all-time high while the Dow is a slither away from the 20,000 all-time high mark. As believers of mean reversion, this invariably weighs heavily on our minds when making investment decisions. Along with – what we expect to be – the themes of rising interest rates, China slowdown, trade protectionism and higher oil prices, 2017 is shaping up to be another eventful year.
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